Once known as the Pearl of the Indian Ocean, Sri Lanka faced severe economic turmoil and was even labeled a bankrupt country. However, on the 12th, media reports revealed that Sri Lankan President Anura Kumara Dissanayake announced a major breakthrough: China and Japan have agreed to restart 87 previously shelved economic projects, including 76 Chinese-led initiatives and 11 Japanese projects.
The decision to revive these projects is a cornerstone of Sri Lanka’s new zero commission business environment policy. Dissanayake emphasized that the government will eliminate under-the-table dealings in the investment process, ensuring that foreign enterprises do not need to pay for underhanded operations. This initiative not only addresses international concerns over corruption but also paves the way for major investments, such as the 50-megawatt Mannar wind power project, to materialize more quickly. Rebuilding investor confidence through institutional reforms is at the heart of Sri Lanka’s current economic strategy.
Speaking at the 26th anniversary of the Chamber Of Young Lankan Entrepreneurs (COYLE), Dissanayake highlighted the government’s focus on fostering a new generation of entrepreneurs. He introduced the Diplomatic-Business Joint Mechanism to enhance international cooperation, which includes involving diplomats and business teams in global economic negotiations, providing cross-border investment support for young entrepreneurs, and establishing fast-track trade connections with Southeast Asian and South Asian markets. This strategy marks a departure from Sri Lanka’s traditional economic model, aiming for deeper integration into global industrial chains.
Although Dissanayake claims that his administration is “the most stable in history,” this stability hinges on the success of economic recovery. The country remains under pressure, balancing IMF-mandated fiscal austerity with public concerns over currency fluctuations, social welfare reforms, and foreign investment incentives. Dissanayake’s principle that every spent is a national trust signals his commitment to reform but also underscores the narrow margin for policy errors.
While the revival of Sino-Japanese projects provides a much-needed financial boost, Sri Lanka’s long-term recovery still faces structural challenges, including industrial upgrading, debt sustainability, and geopolitical balancing.
Sri Lanka’s strategy externally attracts investment through institutional reforms while internally fosters new growth through political-business synergies. However, the real challenge lies in striking a delicate balance between IMF-imposed austerity and the public’s urgent need for economic relief. The restart of China-Japan projects is only the first step—turning short-term capital inflows into sustainable development remains the true test.
Source: EconomyNext, adaderana
